In a pre-written testimony, the Deputy Assistant Director of Office of Investigations at U.S. Secret Service, Robert Noye, suggested that regulators should be setting their sights on various privacy coins. In his message, Noye stated that the government should “consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains.” He also noted that coin tumblers and cryptocurrency mining pools should be heavily monitored. Coin tumblers are services which mask a coin or token’s history of transactions— they are often (but not always) used in illicit transactions.
Privacy coins vs. regulators
Noye’s testimony is particularly worrying for coins like Monero, Zcash, and DASH. He is suggesting some form of surveillance and, possibly, an entire ban. This would not be the first time that a regulatory body has acted unfavorably towards these coins— the Japanese FSA has previously alluded to a restriction on privacy coins too.
Robert Noye later pointed out that privacy coins are “increasingly prevalent across exchange platforms and average around $300 million in daily transaction volume at domestic and foreign-located exchanges.” His suggestion here seems to be that many of these transactions are the result of illegal behavior, but of course, there is no way of truly knowing that.
Privacy and Safety
A common argument used by governments and regulatory bodies is that the existence of privacy coins leaves people in danger due to the lack of monitoring. This appears to be the angle Robert Noye is taking too, but this is a hazardous way of assessing the situation. While it is true that surveillance can (and has) prevented numerous crimes in the past, the erosion of privacy and autonomy is not something that should simply be accepted. The act of privacy should not be taken lightly, and taking it away from a society should not be in the question unless there is solid and legitimate evidence to do so. Many believe that the possibility to live a private life is something that should be offered to all individuals, and privacy coins allow a form of this to happen with ease.
Zcash has since responded to the statements made by Robert Noye in a press release. In their post, they said, “We believe it is in the best interest of the citizens of the United States, the US Secret Service, and other governmental organizations to also advocate for those rights and protect its citizens and businesses from harm.” Zcash also pointed out that their coin was created “precisely to protect the privacy rights of law-abiding citizens and guard them against harm by bad actors.”
Kai is a cryptocurrency copywriter and professional trader. He can often be found investigating various cryptocurrencies, whitepapers, and blockchain technologies. Kai has been a professional writer for 5+ years, and has invested in 50+ different coins and tokens. He also currently studies Law and Philosophy at university.